Making News

02/04/15: Institutional Investor examines the fragile five emerging markets countries and reaches out to investment professionals for their insights. "Ukraine will default, in my opinion," says Eric Fine. "However, given that it is considered to be an important U.S. national security priority, official support appears endless, perhaps leading to a less disorderly default." View article »

10/30/14: Even though Russia’s Central Bank has been intervening almost daily to soften the decline of the ruble, it has been unable to stop the currency’s slide. The WSJ quotes Eric Fine: "The ruble is poised to stay volatile. Whether it gets stronger or weaker, I wouldn’t own any Russian assets. Not because they’re not valuable…but the sanctions make it way too risky. The upside is not worth that downside." View article »

8/27/14: Reuters analyzes the run-up to Brazil’s upcoming presidential election and consults Eric Fine. According to Fine, candidate Marina Silva “passes the message that she would be the country’s president and not its chief economist…But because of Brazil’s economic problems, the situation may require someone who’s more tested.” View article »

8/9/14: Barron’s discusses the recent performance of several investments that contain exposure to Russia and consults Eric Fine on the outlook for emerging markets bonds. "Russia is such a big part of the [JPMorgan Emerging Markets Bond] index that most investors satisfied themselves with underweight positions. But what if they all decided to go to zero weight after the sanctions?"View article »

Fund Literature

Monthly Commentary: February 2015

By: Eric Fine, Portfolio Manager

The Fund’s biggest winners were Argentina, Chile and China (all in hard currency). The Fund’s biggest losers were Brazil, Korea and Peru.

The key investment themes that characterize our portfolio remain the same. We prefer hard-currency debt over local currency (positions denominated in Polish Zloty and Hungarian Forint are our only local currency debt exposures). The main reasons include the weak growth outlook in emerging markets (EM), the negative impact of low commodity prices on EM assets (especially on EM currencies), low real interest rates in many countries, and the re-examination of local-only risk outflows.

Exposure to selected idiosyncratic opportunities in Argentina and Vietnam (whose credit ratings, in our opinion, could be re-rated) remains important for our portfolio. We are cognizant of Argentina’s macroeconomic risks. We also realize that the resolution of the holdouts issue will require time. However, the forthcoming presidential elections are, in our view, likely to be a positive catalyst for the country as the constitution does not allow the current president, Cristina Kirchner, to re-run for office. As a result, a more orthodox policy is likely to emerge and this should create opportunities for Argentina to eventually access international markets. An important consideration is that Argentina’s total indebtedness remains low in comparison with the single B-rated economies and a positive change in the policy vector could give a boost for the sovereign bonds to re-price.

Vietnam is a robustly growing economy with a healthy current account surplus and a balanced approach to its currency’s exchange rate; the central bank lets the Dong depreciate gradually allowing the country to conserve its international reserves. Vietnam is a net energy and metals importer. As such, its economy – and especially the external balance – could stand to benefit from the currently low commodity prices.

A new aspect of our portfolio is local currency-denominated debt exposure in Hungary and Poland. We have avoided the region since the onset of the Ukraine crisis in November 2013. A number of factors make these two countries attractive to us. First, the real local interest rates in both Hungary and Poland are among the highest in EM (while the local curves are reasonably steep). Second, both countries are sizeable net commodity importers, which is a boon for their external balances and growth. Third, the growth dynamics in both Poland and Hungary finally started to improve in 2014, in large part due to stronger domestic demand. Fourth, inflation in both countries is expected to stay below zero for a large part of 2015, indicating that local central banks are unlikely to start tightening any time soon. Finally, the government debt in Poland and Hungary might benefit from the expected further yield compression in Europe on the back of the European Central Bank’s quantitative easing.

Emerging Markets Bonds Then and Now: From Weakness to Resilience

Emerging Markets Bonds: Key Themes for 2015

"A significant portion of our portfolio is composed of long-dated, investment grade, dollar-denominated government bonds, i.e., sovereign bonds. Why do we like them? Our process tells us that credit curves are steep and we're supposed to like the long end of these bonds."

Van Eck Rapid Fire: Emerging Markets Bonds Roundtable

Eric Fine and Fran RodilossoPortfolio Managers

"The Hong Kong protests are not likely to impact credit markets in any direct sense. We do think, however, that these types of protests are likely to increase around the world....atomization is happening and we're going to see more of this in Europe and perhaps in other countries."

Emerging Markets in Focus: Argentina Bond Default

"Our starting point is comparing countries' fundamentals to what premium you're getting. Are you getting paid for that risk? Looking at fundamentals alone and putting the important technical default issues to the side, one finds that Argentina is cheap. It's paying spreads that are too high for its fundamentals."

Global Research: Ukraine

"The scenario of civil war and perhaps a civil war that has broader implications for the region is a scenario we have to think about. It's hard to assign probabilities to that, but the market seems to be saying it's a zero and I think zero is definitely the wrong answer."

Why Unconstrained Approach to EM Bond Investing?

"In one word, the value of an unconstrained approach to emerging markets bond portfolio investing is ‘flexibility’. The market changed a lot in the past 20 years. At first, it was only hard currency bonds. Then came hard currency corporates followed by local currency sovereigns. Nowadays, local currency corporates are becoming more prominent. Having an unconstrained mandate is key to optimizing the portfolio using all four sub asset classes."

Unless otherwise stated, portfolio facts and statistics are shown for Class A shares; other classes may have different characteristics.

†NAV: Unless you are eligible for a waiver, the public offering price you pay when you buy Class A shares of the Fund is the Net Asset Value (NAV) of the shares plus an initial sales charge. The initial sales charge varies depending upon the size of your purchase. No sales charge is imposed where Class A or Class C shares are issued to you pursuant to the automatic investment of income dividends or capital gains distribution. It is the responsibility of the financial intermediary to ensure that the investor obtains the proper “breakpoint” discount. Class C, Class I and Class Y do not have an initial sales charge; however, Class C does charge a contingent deferred redemption charge. See the prospectus and summary prospectus for more information.

1Van Eck Associates Corporation (the “Adviser”) has agreed to waive fees and/or pay Fund expenses to the extent necessary to prevent the operating expenses of the Fund (excluding acquired fund fees and expenses, interest expense, trading expenses, dividends and interest payments on securities sold short, taxes and extraordinary expenses) from exceeding 1.25% for Class A, 1.95% for Class C, 0.95% for Class I, and 1.00% for Class Y of the Fund’s average daily net assets per year until May 1, 2015. During such time, the expense limitation is expected to continue until the Board of Trustees acts to discontinue all or a portion of such expense limitation.

3Average Yield to Worst measures the lowest of either yield-to-maturity or yield-to-call date on every possible call date. Effective duration takes into account that expected cash flows will fluctuate as interest rates change. Effective maturity is the length of time until a fixed income investment returns its original investment. Distribution Yield is the amount of cash flow paid out and is calculated by dividing the annual income (interest or dividends) by the current price of the security. Averages are market weighted. These statistics do not take into account fees and expenses associated with investments or the Fund.

The views and opinions expressed are those of Van Eck Global. Fund manager commentaries are general in nature and should not be construed as investment advice. Opinions are subject to change with market conditions. Any discussion of specific securities mentioned in the commentaries is neither an offer to sell nor a solicitation to buy these securities. Fund holdings will vary.

You can lose money by investing in the Fund. Any investment in the Fund should be part of an overall investment program, not a complete program. The Fund is subject to risks associated with its investments in emerging markets securities. Investing in foreign denominated and/or domiciled securities may involve heightened risk due to currency fluctuations, and economic and political risks, which may be enhanced in emerging markets. As the Fund may invest in securities denominated in foreign currencies and some of the income received by the Fund will be in foreign currencies, changes in currency exchange rates may negatively impact the Fund’s return. Derivatives may involve certain costs and risks such as liquidity, interest rate, market, credit, management and the risk that a position could not be closed when most advantageous. The Fund may also be subject to credit risk, interest rate risk, sovereign debt risk, tax risk, non-diversification risk and risks associated with non-investment grade securities. Please see the prospectus and summary prospectus for information on these and other risk considerations.

Investing involves risk, including possible loss of principal. An investor should consider investment objectives, risks, charges and expenses of the investment company carefully before investing. Bond and bond funds will decrease in value as interest rates rise. The prospectus and summary prospectus contain this and other information. Please read them carefully before investing.